CR: “A world of pain” for uninsured seeking insurance on their own

December 3, 2007

CONSUMER REPORTS: “A WORLD OF PAIN” FOR UNINSURED SEEKING INSURANCE ON THEIR OWN
Third Report About America’s Healthcare Crisis With 6 Tips For Buying Individual Insurance

YONKERS, NY — Consumer Reports’ yearlong investigation into health insurance explains the huge hurdles that consumers, including healthy people with minor ailments, face when they try to acquire health insurance on their own.
According to research cited in the report, 89 percent of people who looked into buying individual insurance had not bought it because it was too costly, they were turned down for health reasons, or it provided inadequate benefits. The report, “On their Own,” is featured in the January issue of Consumer Reports, on newsstands December 4 and available online at www.ConsumerReports.org/health where CR maintains a health insurance hub for consumers. The report is the third in a series on America’s healthcare crisis.FIXING THE PRIVATE INSURANCE MARKET: THE HURDLES
“What we’ve learned in our investigation is that private insurance is virtually out of the question for most uninsured Americans—76 percent to be precise—and those who do manage to acquire insurance on their own tell us wrenching stories about the high costs and poor coverage they receive,” said Nancy Metcalf, health editor at Consumer Reports. People in need of private insurance face a daunting dilemma—buying limited health insurance at a high cost or foregoing insurance altogether. Who could fall into this category? Any adult who hopes to retire early, loses a job, is self-employed, or has an adult child leaving a group plan.

CLOSE UP: INDIVIDUAL COVERAGE, MORE COMPLAINTS
Source: Consumer Reports National Research Center

INDIVIDUAL PLAN

EMPLOYER PLAN

Overall complaints with coverage

71%

53%

Insurance covered most costs

55%

81%

Premium is too high

52%

29%

Postponed needed medical care because of costs

45%

31%

Deductible is too high

41%

28%

Does not adequately cover costs of doctor visits

26%

16%

DISQUALIFYING MEDICAL CONDITIONS
According to Metcalf, the latest nationally representative survey conducted by the Consumer
Reports National Research Center underscores the level of discontent of the 7 percent of Americans who
manage to obtain individual coverage. “If we’re going to rely on individual insurance to fix our health
care system, it needs a major overhaul,” continued Metcalf.DISQUALIFYING MEDICAL CONDITIONS
The “world of pain” described in the Consumer Reports investigation hones in on the enormous differences that exist in state regulations of individual insurance plans. A person who could easily buy insurance in one state could be shut out of the market in another. Most striking is the long list of health conditions that could result in being declined coverage, even for such common conditions as hay fever and acid reflux.
Medical underwriting, a practice in which insurers can reject people with illnesses, is the reason why, explains CR. Michael Miano, profiled in the report, learned that he was uninsurable because he had diabetes. Miano’s case represents one of the most significant problems in the individual insurance market. While it’s illegal for insurers to discriminate against people in group plans because of their health, medical underwriting is allowed in all but a handful of states.
Some prominent examples of medical underwriting:
Health Net lists diabetes, once diagnosed, as a “declinable condition.”
PacifiCare may decline anyone who takes prescription medications for high blood
pressure, acid reflux, asthma, migraines, arthritis, or depression.
Aetna won’t insure anyone who’s had a hip or knee replacement.FIXING THE SYSTEM: CU’s TAKE
Several presidential candidates propose tax incentives for people to buy individual insurance. Consumers Union, the nonprofit publisher of Consumer Reports, opposes that approach because it does nothing to fix the underlying problems, such as medical underwriting, and the tax breaks wouldn’t be enough to make insurance affordable for people with lower incomes. Other candidates propose to expand coverage by bringing more people into the risk pools, by, among other things, requiring insurers to cover everyone regardless of health history, and subsidizing
premiums for lower-income consumers. Consumers Union believes that those are more promising approaches, so long as they are coupled with vigorous efforts to control costs, eliminate waste, and encourage better coordination of care for chronic conditions.TIPS FOR BUYING INDIVIDUAL INSURANCE
(Log on to www.ConsumerReports.org/health for more detail)Know Your State Laws: Log on to www.healthinsuranceinfo.net for information about state rules outlined by the Georgetown University Health Policy Institute.Be Careful Leaving a Plan: Consumers should be sure to exercise their rights under the federal Health Insurance Portability and Accountability Act (HIPAA).Research the Market: Check out www.ehealthinsurance.com, a reputable Web site with links to hundreds of individual plans nationwide. Consumers should also check their state’s insurance
department Web site, which might have a list of companies licensed to sell insurance.Get Adequate Benefits: Consumers should make sure that any policy they buy covers everything that is “medically necessary” for any health problem, including emotional disorders.Look Beyond The Premium: The real costs of an insurance plan include the monthly premium, the
annual deductible, and the copays for office visits and prescription drugs.Keep Looking: Thirty-four states maintain high-risk pools for people who can not pass medical
underwriting—though consumers can’t count on hearing about that from a broker or private insurer.